Question

From the following balances extracted from the books of M/s Ahuja:

$\begin{array}{cc}& \text{Amt. (Rs.)}\\ \text{Opening stock}& 25,000\\ \text{Credit purchases}& 7,50,000\\ \text{Cash purchases}& 3,00,000\\ \text{Credit sales}& 12,00,000\\ \text{Cash sales}& 4,00,000\\ \text{Wages}& 1,00,000\\ \text{Salaries}& 1,40,000\\ \text{Closing stock}& 30,000\\ \text{Sales return}& 50,000\\ \text{Purchases return}& 10,000\end{array}$

Calculate the amount of -
(i) Cost of goods available for sale

(ii) Cost of goods sold during the year

(iii) Gross profit

Answer 1

(i) Cost of goods available for sale means total goods produced during the year.

Cost of Production
= Opening Stock + Purchases + Wages - Purchases Return
= Rs. 25,000 + (Rs. 7,50,000 + Rs. 3,00,000) + Rs. 1,00,000
- Rs. 10,000
= Rs. 11,65,000

(ii) Cost of Goods Sold
= Cost of Production - Closing Stock
= Rs. 11,65,000 - Rs. 30,000
= Rs. 11,35,000

(iii) Gross Profit
= Net Sales - Cost of Goods Sold
= (Rs. 12,00,000 + Rs. 4,00,000 - Rs. 50,000) - Rs. 11,35,000
= Rs. 15,50,000 - Rs. 11,35,000
= Rs. 4.15,000